October 8 - SeaMetric International AS has cancelled the contracts for the construction of two heavy transport vessels in China.
SeaMetric has made total claims of USD288.4 million, covering refunds and compensation, towards the main contractor ESSCA and the CPLEC shipyard. The cancellation decision has been made in agreement with SeaMetric's major bondholders.
SeaMetric has developed the Twin Marine Lifter (TML) System for installation and removal of very heavy objects in the offshore oil and gas industry such as platform topsides and jackets with weights of 20,000 tonnes and above. SeaMetric's long term goal is to own and operate the TML lift system world-wide.
Since September 2007, SeaMetric has been constructing two vessels for the first TML System at the China Petroleum Liaohe Equipment Company (CPLEC) shipyard in Panjin, China. The shipyard's ultimate owner is the state owned China National Petroleum Corporation (CNPC). The construction of the vessels is significantly delayed. The delays affect negatively both SeaMetric's business development efforts and the possibilities for attracting further financing for the project.
SeaMetric has during 2008 and 2009 unsuccessfully tried to find an agreed arrangement with the ESSCA ("the Builder") and the CPLEC shipyard ("the Subcontractor") to get the project back on track. SeaMetric has decided to cancel the construction contracts and make total claims of USD288.4 million, covering refunds of USD25.2 million and compensation for other losses and expenditures of USD263.2 million, towards the Builder and the Subcontractor. As SeaMetric's USD60 million bond issue is secured through the cancelled contracts, the cancellation decision has been made in agreement with SeaMetric's major bondholders.
The cancellation is caused by delays and other breaches of contract. The contractual delivery date for the vessels was 31 August 2009. It can be established beyond reasonable doubt that delivery will be delayed by more than 180 days, which entitles SeaMetric to cancel the contracts.
SeaMetric still aims to secure financing for the construction of the TML System - the world's largest marine heavy lifting system - consisting of two TML vessels and a number of TML lifting arms.
SeaMetric now undertakes a bid process towards experienced and competent yards in China. A major Chinese bank has expressed willingness to assist SeaMetric in solving its financing requirements for such construction program. A number of different combinations of yards and financing structures are currently being investigated.
